Attorney General Karl A. Racine announced a new lawsuit against Amazon and Amazon Logistics for stealing tips from delivery drivers through a deceptive, illegal scheme that tricked consumers into thinking they were increasing drivers’ compensation when Amazon was actually diverting tips to reduce its own labor costs and increase profits.
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“Workers in the District of Columbia and throughout our country are too often taken advantage of and not paid their hard-earned wages,†said AG Racine.
“What’s more, consumers need to know where their tips are going. This suit is about providing workers the tips they are owed and telling consumers the truth. Amazon, one of the world’s wealthiest companies, certainly does not need to take tips that belong to workers. Amazon can and should do better.â€
In 2015, Amazon launched its Amazon Flex service, which offers quick deliveries of Amazon products through Amazon delivery drivers.
The company currently serves tens of thousands of consumers in the District, filling thousands of orders on a weekly basis. During the checkout process, Amazon encouraged consumers to tip their delivery drivers, offering a default preselected tip amount and assuring consumers that 100% of the tip amount would go to the drivers.
In 2016, Amazon changed its driver payment model so that a large portion of these tips did not go towards increasing drivers’ compensation but were instead used to pay a portion of what Amazon had already promised to pay the driver.
Amazon continued to assure consumers that 100% of tips would go to drivers despite the fact that the company was secretly using these tips to subsidize its own labor costs and increase profits.
Amazon also implemented a widespread campaign, both internally and externally, to hide the truth about their tip policy from both consumers and workers. They repeatedly told consumers, both in advertisements and during the checkout process, that 100% of tips would go to drivers when this was not the case.
And instead of informing drivers of the changes to its tip process, Amazon changed the way it displayed tips to drivers in the app so that drivers could no longer see the amount each consumer tipped.
When hundreds of drivers caught on and asked Amazon why they were suddenly receiving less money overall for their deliveries, Amazon responded with misleading, boilerplate language that excluded any mention of this change in policy.
As a result of its deceptive tactics, Amazon experienced significant cost savings. In the years Amazon had this policy in place, consumers in D.C. paid millions of dollars in tips to reward their delivery drivers for providing a valuable service.
Meanwhile, Amazon used much of those tips to save on its own operating costs, thereby deceiving both District consumers and Amazon Flex drivers.
While Amazon later reimbursed the Amazon Flex drivers as part of a settlement with the Federal Trade Commission (FTC), it has thus far escaped appropriate accountability, including any civil penalties, for consumer harm. ■